Neville Richardson : A merger of mutuals in interesting times

Neville Richardson thinks putting Britannia together with Co-op Financial Services can create a real force. David Prosser reports

Neville Richardson is a man who believes his time has come. As chief executive of Co-operative Financial Services, he runs the financial arm of the world's largest consumer co-operative. It's a mutually owned organisation, like the Britannia Building Society – which he ran last year until its merger with Co-operative Insurance Services (CIS) brought it into the Co-op group.

Suddenly, everyone is talking about mutuals and co-ops. David Cameron wants more of them running local schools and hospitals. Retailer John Lewis, owned by its employees, has got its own TV doc-umentary. And the credit crisis has been devastating for the reputation and brand value of the banks that have always dominated financial services in this country. Richardson is cautiously delighted. "Mutuality is not a panacea: as with plcs, you have well run and badly run organ-isations," he says. "The key, though, is what the organisation is all about. Since you don't have shareholders, every time a customer walks through the door, you're dealing with an owner of the business."

It is certainly the case that having mutual status during the credit crisis was not the financial equivalent of a cloak of invisibility. Though many have noted that the banks which blew up most dramatically – Northern Rock, Bradford & Bingley and HBOS – were all former building societies that had demutualised in the mid-Nineties, there have been casualties in the mutual sector too, with several players having to be rescued by larger rivals.

Overall, however, Richardson believes he and his colleagues have had a good war. "The thing that people used to point out as the advantage of being a bank rather than a mutual was access to capital and liquidity," he says. "Well, that forced us to hold more of both, and you saw how the supposed advantage of the banking sector worked out during the crisis."

The building society sector has also benefited, Richardson thinks, from the shake-out prompted by the departure of so many big names in the Nineties – and the targeting of many more by carpetbaggers eager to make a quick buck from a demut-ualisation. "In the long run, the carpetbaggers did us a favour," he says. "They forced us to focus on efficiency and proving our merit. We've had to prove that we can be at least as strong as a plc." The best mutuals were thus in a position to capitalise on the post-crisis environment for financial services.

"In our research, the phrase that keeps coming out is 'anger'," Richardson adds. "The inertia in people's mindset before the crisis has been shattered by what happened: last year, we saw a 38 per cent increase in the number of new current accounts opened with us."

It was the desire to make the most of this sort of opportunity that drove the merger of Britannia and CIS last year, a deal that was done remarkably quickly. In January 2009, new legislation tidying up the laws on mutuality – without which the merger of a building society and a co-operative would not have been legally possible – was winding its way through Parliament. A few days before it received Royal Assent, Richardson ran into David Anderson, the boss of CIS, at a business meeting in the North West. They quickly agreed that a combination of their organisations might be a compelling proposition.

The Co-op's financial services businesses offered insurance products, current account banking and a credit card. Britannia was strong on savings and mortgages. Rolling the two together would create a full-scale financial services business capable of taking on the big banks, the two men concluded.

Nevertheless, Richardson, who spent more than 20 years in accountancy before joining Britannia in 1998, had some concerns. In his days at what was then Price Waterhouse, he had worked on plenty of takeovers and mergers, some much more successful than others. "The key to making this deal work, like any other, is working out whether you have similar cultures and shared values," he says. "The mergers that fail are those that get hung on up on the emotive issues."

For this reason, the business has chosen to maintain both the Co-operative and Britannia brands for a couple of years, and to preserve their presences in their respective Manchester and Leek headquarters. There has been remarkably little use of terms such as "synergy" – the sort of jargon generally bandied around when businesses come together.

Thanks to Britannia, Richardson points out, the business has a nationwide branch network that will eventually be able to offer the products Co-operative brought to the table, notably current accounts. In the longer term, the potential of the Co-operative Group's network of supermarkets is also highly attractive. The group's third main arm, Co-op Travel, is clearly ripe for exploitation too.

Richardson says the key to making the merger really fire on all cylinders will be taking staff with him. Having seen members of both organisations sign off on the deal last summer, Richardson embarked on 13 roadshows around the country, making presentations to 24,000 staff.

It was the sort of communication exercise that is an important part of running a mutual business, he says. "One of our values is that this has to be a great place to work, grow and develop" and communication and is vital, he says.

It's the sort of sentiment one might expect to hear from any business, of course, but Britannia has regularly been voted one of the best employers in the UK to work for. Senior managers' pay is partly determined by a scorecard of performance indicators based on the financials, but also based on feedback from customers and employees. Richardson is acutely aware of the financial services industry's reputation on pay. "Look, we have to set pay partly on the basis of the market, but the overall picture of working for an organisation is a combination of things, and if your only tool is pay then people are going to end up going elsewhere."

The Co-operative Group's focus on social responsibility will foster the perception of staff being on the right side of the argument, he says. "This is a bank that has turned away £1bn-worth of business because it didn't meet our ethical standards," he says, pointing out that as a shareholder the group voted against the deal which saw Royal Bank of Scotland acquire ABN Amro, and against the remuneration packages handed to Northern Rock executives before that bank went bust.

CV: Neville Richardson

Richardson, 52, is the chief executive of Co-operative Financial Services (CFS). He is married with four children


*Has run CFS since last summer, when the business was formed following a merger between Co-operative Insurance Services and the Britannia Building Society.

*Richardson previously ran Britannia, having first joined the society in 1998 as finance director following a 21-year career in accountancy.

*Serves as a director of Mutuo, an industry-wide company set up to promote the benefits of mutuality, as well as being a member of the court of the University of Lancashire.


*A keen runner of half marathons, Richardson supports Manchester City, Sale Sharks and Lancashire County Cricket Club.

Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
ebooksAn unforgettable anthology of contemporary reportage
peopleHis band Survivor was due to resume touring this month
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Front-Office Developer (C#, .NET, Java,Artificial Intelligence)

£30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...

C++ Quant Developer

£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

Java/Calypso Developer

£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...

SQL Developer

£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...

Day In a Page

Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

The man charged with inspecting doctors explains why he may not be welcome in every surgery
Stolen youth: Younger blood can reverse many of the effects of ageing

Stolen youth

Younger blood can reverse many of the effects of ageing
Bob Willoughby: Hollywood's first behind the scenes photographer

Bob Willoughby: The reel deal

He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
Angelina Jolie's wedding dress: made by Versace, designed by her children

Made by Versace, designed by her children

Angelina Jolie's wedding dressed revealed
Anyone for pulled chicken?

Pulling chicks

Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
9 best steam generator irons

9 best steam generator irons

To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

Rooney admits England must ‘put on a show’ to regain faith

New captain vows side will deliver for small Wembley crowd
‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

‘We knew he was something special’

Radamel Falcao's journey from teenage debutant to Manchester United's star signing
'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York